The Path to a Best-in-Class Reverse Logistics Program
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3 The Path to a Best-in-Class Reverse Logistics Program Ann-Marie Daugherty Senior Director of Transportation Rob Small Sr. Director, Supply Chain Performance Analytics Troy Witt Team Leader, Sales Capability Development
4 Putting unsaleables in context A 15 BILLION DOLLAR PROBLEM.5% - 3.5% of sales Grocery 1.2% Drug 1.75% Mass 1.5% Value 2.5% Club.8% 4
5 Where is the industry today? RATES OF DAMAGE RATES OF EXPIRED 0.80% 2.00% 0.70% 1.80% 0.60% 1.60% 1.40% 0.50% 1.20% 0.40% 1.00% 0.30% 0.80% 0.20% 0.60% 0.40% 0.10% 0.20% 0.00% % :.38% 2015:.48% 5
6 PRODUCT FRESHNESS IS THE LEADING CONTRIBUTOR TO UNSALEABLES AT THE SHELF 45% Damaged 55% Expired 29% Damaged 71% Near-Expired/ Expired 6
7 How are we (as an industry) winning? Data analytics & benchmarking Root cause identification Prioritizing opportunities Cross-functional approaches From manufacturing through the retail shelf Collaboration Data sharing and transparency 7
8 Our co-presenters TROY WITT Team Leader, Sales Capability Development ANN-MARIE DAUGHERTY Director, Inbound Logistics and Supply Chain 8
9 A MANUFACTURERS PERSPECTIVE How Clorox has realized success
10 Who Is Clorox? $5.7 Billion (Fortune 500) 7,700 employees world wide #1 or #2 leading brands in our categories We Make Everyday Life Better, Every Day 10
11 Reducing unsaleables creates wins for retailers Increased sales and margins Better On Shelf Availability (OSA) Product going out the front door, not the back door Improved Supply Chain efficiency Less damages - reduced handling & paperwork Reduces costs (Hazardous disposal, etc.) Improves sustainability and reduced environmental impact Partnership studies and collaboration drive: Retailer specific results vs. peer group via benchmarking Actionable root cause analysis It s the right thing to do!! 11
12 Reducing unsaleables creates wins for Clorox Maintain brand equity Tons of actionable data Knowledge is power Understand root cause of opportunities through Clorox, retailer supply chain to our mutual consumer Trends, SKU data, Mfg., DC Ops, retailer DC data, retail data, etc Continuous improvement Leveraging information to drive improvement Business Units, R&D, new product design, Quality, packaging improvements, Unsaleable Advisory Board Happy Retailers + Happy Consumers = Happy Clorox 12
13 Unsaleables Clorox working smarter CURRENT UNSALEABLES PROGRAM Onsite resource from Inmar Makes data smart Cross functional Unsaleables Advisory Board (Quality, PSO, R&D, Sales, Finance) Business Unit Snapshots based on Inmar Audit data sent quarterly to cross-functional counterparts (Quality, PSO, R&D, Sales) Enables constant visibility across the enterprise of product performance in market. Very strong partnership with Quality Group Strong relationships keep unsaleables top of mind 13
14 Unsaleables Clorox working smarter CURRENT UNSALEABLES PROGRAM cont. Project charter unsaleables checklist Informs New item launch teams: What do we know about this brand/package/form in market today and what is the impact on Unsaleables? Enterprise education Socialization with other functions so unsaleables is top of mind and how choices we make have up stream have implications down stream in the supply chain for Clorox, their retailers and our consumers Internal Clorox audits (hidden damage, delivery accuracy, OS&D) 14
15 Unsaleables Clorox working smarter RETAILER FOCUSED POLICIES/PROGRAMS Production warehouse standards Ex. Minimum ship thresholds for shelf sensitive items Audits within retailer RDCs and retail shelf OS&D overs/shorts/damages COLLABORATION WITH RETAILERS Partnership Studies End-to-end supply chain root cause analysis for unsaleables Testing new product launches with retailers The most intelligent supply chain must be EDUCATED and COLLABORATIVE internally and externally to reach its FULL POTENTIAL 15
16 A RETAILER S APPROACH The Giant Eagle unsaleables strategy
17 Multi-format business strategy: ANNUAL SALES $9.7B 17
18 Retail and distribution footprint GLCS (Frozen) 18
19 RECLAMATION AT GIANT EAGLE Giant Eagle started reclamation in January 2015 for all corporate stores Food Bank strategy supports our commitment to our communities Better visibility into the data 0% Liquidated 75% Destroyed 25% Donated 22% Liquidated 36% Destroyed 42% Donated 2014 UNIT DISPOSITION 2015 UNIT DISPOSITION 19
20 RECLAMATION creates a financial accounting system that promotes consistent operating procedures, improves shrink, and creates transparency across the SUPPLY CHAIN Retail Unsaleables Management Supply Chain Analytics Warehouse Unsaleables Management Vendor Management 20
21 Giant eagle product condition analysis 11% UNDAMAGED 19% DENTED 50% Expired 5% TORN 2% LEAKING 0% RAZOR CUT 4% CRUSHED 7% APPEARANCE 2% OTHER 21
22 Corporate score card KEY METRICS Top 5 Vendors Item disposition summary PCA Results Top 5 Vendors for expired, damaged, discontinued, and undamaged PCA results by retail region Top reclamation scans by store Top 10 UPCs
23 Vendor Score Card Reclamation FYTD Total Units - Reclamation (000) 51 Reclamation Disposition - Quarter 2 FY16 Total Dollars - Reclamation (000) $111 Total Units - Escan (000) * Total Dollars - Escan (000) * $105 Donate 5274 Total Units (000) 106 Liquidate Total Dollars (000) $216 Destroy 887 Swell Allowance - Current Cond. FYTD Gross Purchases (000) $35,372 Loss as a % of Purchases 0.61% Current Swell Rate(s) Category ARP Approx. Swell Collected (000) $219 Swell Gap (000) $3 Donate Liquidate Destroy 5274 Top 5 Reclamation Items - Q2 Cost Quantity Item 1 $6, Item 2 $6, Undamaged Item 3 $2, % Item 4 $1, Damaged Item 5 $3, % $19,929 14,072 Appearanc 16 Damaged 15 Comments Undamage 5 Expired 76 Other 6 Appearance 14% PCA Data - Period 7 Only Expi red 64% Other 5% PCA = Product Condition Analysis 23
24 What s next for Giant Eagle Corporate scorecard for unsaleables Monthly vendor scorecards for key vendors Connecting category rotation to inventory management tasks at retail Move cigarettes and tobacco to reclamation Improving retail and warehouse handling processes to reduce damages Leverage supply chain analytics to engage vendors in reducing unsaleables Enhancing system capabilities for managing product disposition and swell payments 24
25 Clorox product improvement examples Disinfecting wipes Improved labels Tear and product resistant Cost increase to Clorox 64oz Oval Bottles Added gm weight to increase wall thickness Reduce probability of denting Cost increase to Clorox Brita packaging Changed packaging Reduced tampering Cost neutral Prior packaging Breakthrough packaging 25
26 Clorox & Giant Eagle example CLOROX Reclamation FYTD Total Units - Reclamation 4,000 Total Dollars - Reclamation Total Units - Escan * 700 Total Dollars - Escan * Donate 36 Total Units 4,700 Liqudate 1,153 Total Dollars Destroy 18% 268 Reclamation Disposition Quarter 2 FY16 3% Swell Allowance - Current Cond. Gross Purchases (000) Loss as a % of Purchases Current Swell Rate(s) Approx. Swell Collected (000) Swell Gap (000) FYTD Category ARP Donate Top 5 Reclamation Items - Q2 Cost Quantity HVR ORIG RANCH W/ SWEET CHILI 263 HVR ORIG RANCH W/ RSTD GARLIC 123 HVR FF RANCH DRESSING 103 HVR MILK ORIGINAL RANCH 81 HVR LITE BUTTERMILK RANCH Liqudate Destroy 79% 26
27 Q&A
28 HOW DID WE DO? CLICK THE SURVEY BUTTON FOUND ON THE SESSION PAGE
29 THANK YOU Rob Small
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